Feedback on eastern pipeline ‘encouraging’: TransCanada CEO

Pipeline giant expects to file regulatory application for eastward pipeline by year-end.

February 13, 2013   by The Canadian Press

CALGARY—TransCanada Corp. aims to file a regulatory application for its eastbound pipeline proposal by year-end following “encouraging” feedback from potential customers.

The Calgary-based pipeline giant also acknowledged that a long-awaited State Department decision on its controversial Keystone XL oil pipeline is unlikely to come during the first quarter of this year.

TransCanada is in the midst of gauging shipper interest in a project that would see part of its underused natural gas mainline converted to oil service, shipping as many as one million barrels a day of western crude to refineries in Quebec and potentially the East Coast.

“Discussions with potential shippers and other stakeholders are well underway to determine if it is a project that the market wants and I would say to date,those discussions have been very, very encouraging,” said CEO Russ Girling.

Politicians are on board with the notion, with New Brunswick Premier David Alward and Alberta counterpart Alison Redford touting eastern pipelines in Calgary last week. Federal Natural Resources Minister Joe Oliver has also embraced the idea.

Refineries in eastern Canada and the US Eastern Seaboard currently import some 1.5 million barrels a day of expensive crude from countries such as Saudi Arabia and Libya, said Alex Pourbaix, president of energy and oil pipelines at TransCanada.

Refineries in that part of the continent are geared to process light crude, so oil from areas like Saskatchewan is more likely to flow there than from the oilsands _ at least initially.

Pourbaix says he sees an “open season”—a period of 30 to 60 days where potential customers can bid for space on the line—taking place toward the end of the second quarter.

TransCanada would like to have some comfort in the level of interest before reaching that stage, he added.

“We want to make sure we sop up all the potential barrels that are out there, but we wouldn’t go to an open season unless we were very comfortable of getting a minimum level of commercial support for the project,” he said.

The company also intends to spend a lot of time in coming months engaging with communities along the route.

On Keystone XL, Pourbaix said he’s expecting the State Department to release a supplemental environmental impact assessment shortly, taking into account changes to the pipeline’s route through Nebraska.

After that, it would take another two to three months to make a final decision, pushing a decision past the first quarter of 2013.

More than a year ago, the Obama administration rejected an earlier iteration of its controversial Keystone XL pipeline in its entirety, mainly as a result of an environmental backlash in Nebraska.

TransCanada then broke the project up into two parts. The southern portion between Oklahoma and the Gulf Coast, which does not need a permit because it doesn’t cross the Canada-US border, is 45% complete and on track to start up by year-end.

The fate of the $5.3-billion northern portion is currently in the hands of new Secretary of State John Kerry. Last month, the Nebraska governor gave his blessing to a new route through the state that still crosses part of the Ogallala aquifer, but avoids much of the Sand Hills region.

TransCanada expects that 830,000-barrel-per-day line to start up in late 2014 or early 2015.

©The Canadian Press

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